Daniel T. Murray Blog: uber

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I'll give you 2 hints: Lyft and Uber

Every year one story involving insurance seems to capture the public’s attention and this year that story was ridesharing.

The popularity of commercial ridesharing, which connects drivers and riders for a fare with the click of a button on a smartphone app, has skyrocketed across the country in recent years. However, transportation network companies like Uber and Lyft have not only “disrupted” the taxi’s traditional drive-for-hire business model, but have also presented challenges for policymakers and insurers who have a vested interest in protecting the public.

The story that emerged this year had its roots in regulations passed by the California Public Utility Commission in the fall of 2013 and really emerged into public view New Years’ Eve when a driver for Uber struck and killed a 6-year-old in San Francisco. Since then, as the transportation network companies expanded their operations across the country, controversy, cease-and-desist orders, fines for operating without a license, and legislative and regulatory battles have followed.

The narratives involved were quite simple: “upstart tech firms fight cumbersome regulations that stifle innovation and jobs,” “taxis seek level playing field regarding regulations,” “marketplace innovation is great, but the vehicles used in ridesharing services must be properly insured to protect the public.” The TNCs marshalled celebrity investors, a loyal customer base and everyday people who drive for the services to convince policymakers their operations were different from taxis. Meanwhile, the taxis relied on their army of drivers and experience navigating regulatory avenues to preserve their business model. Sometimes lost in the heat of battle over whether TNCs should be subject to the same regulations as taxis are important insurance implications that need to be addressed. However, the insurance industry diligently worked to keep consumer protection front and center.

Faced with the competing interests, city after city, state after state has struggled to find the best way to balance regulations and ensure adequate consumer protections. Because there is very little in statute dealing with TNCs, the National Association of Insurance Commissioners (NAIC) and more than 20 state insurance departments and public service commissions have issued consumer alerts or advisories highlighting the potential insurance gaps in coverage for TNC activity and encouraging TNC drivers to talk with their insurers to understand their exposure.